Euro giants pursue IP telephony in US

Siemens and Ericsson are rumoured to be after the right routers.

European giants Siemens and Ericsson are about to join USouters. counterparts in taking over small IP telephony companies, according to US sources.

Siemens is reported to be interested in Gigabit router start-up Argon Networks in Massachusetts, as well as internet access router producer Assured Access of California. Both companies target internet service providers (ISPs).

Ericsson is said to be looking to acquire Maryland company Torrent Networking Technologies, for approximately $400 million.

Torrent's IP9000 router was initially targeted at enterprise customers, but the firm has now re-focused the product for ISP point of presence.

Representatives at the companies have declined to comment.

The deals would give Siemens and Ericsson some clout in the flourishing IP convergence market. Sales of high speed data network equipment to service providers are taking off as the internet and private IP data networks become the infrastructure for new multimedia applications.

'The Siemens, Nokias and other overseas companies have been busy in Silicon Valley and I think they're establishing some solid relationships and making some smart investments,' said David Helfrich, general partner at Communications Ventures, a Silicon Valley venture capital firm.

Helfrich added that these companies have paid attention to Cisco System's successful strategy of acquiring innovative companies and they want to emulate it.

The North American equipment makers have already begun their shopping sprees. To date, Nortel has spent roughly $9 billion to acquire Bay Networks, Cisco's long-time rival in IP routing.

Lucent has acquired smaller companies, such as Gigabit Ethernet startup Prominet and remote access router company Livingston, and is expected to make a bigger purchase soon.

Cisco, at the same time, has been devouring smaller voice network companies such as Selsius Systems and Summa Four.

The IP telephony market is starting to take off. AT&T said last week that it will launch two trials of its voice-over-IP virtual private network service with user groups. AT&T launched its Global Clearinghouse last month, which will enable ISPs and telecoms companies to operate phone-to-phone IP services to 140 countries.

'Internet telephony is expected to see tremendous growth and AT&T needs to be experimenting with that technology now,' said Ruth Chatterton, an analyst at Telechoice.

Among corporate users, early adopters of internet telephony will likely be medium-sized to large firms with the necessary technical staff, she added.

According to the Gartner Group's Terry Wright: 'Companies will increasingly look to converge voice and data networks. However, it won't happen quickly, it's a slow migration.'

To provide these integrated systems, vendors will have to form partnerships, Wright said, because 'no single vendor can provide the hardware, software and services required to implement converged system'.